Penalty for paying off a fixed rate mortgage early?

T

thejuggler

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We currently have a fixed rate mortgage although this fixed rate will expire in 6 months.
My wife and I are considering selling our current house and moving to her parents home.
In doing this we would use the money we make on the sale of our house to build a granny flat for her parents and we would live in their house. This would allow us to clear or at least pay off a large sum of our current mortgage which was taken out three years ago.

Is there a penalty to be paid if you pay off a fixed rate mortgage early?
 
The penalty is usually based on the time to go and the difference between the fixed rate and the new rate. If your new rate is zero, because you will not be borrowing anything, simply paying off the debt, then in theory the penalty could be 6 months interest. In my view, given the short perios to go, you would be better off not repaying at present.
 
Thejuggler,

My advice would be to ask your current mortgage provider whether there would be a penalty or not. It is conceivable that no penalty will be payable, given that fixed interest rates have risen recently. It really depends on when you fixed the rate, and how that rate equates to a similar period fixed rate in today's terms.

Best of luck...........

BM
 
Thanks for the advice.

The chances are we would not be clearing it until the fixed rate expires in 6 months (by the time Planning Permission comes through etc).

I assume once we revert to a variable rate that there would be no penalty?
 
Hi There,

It will all depend on what the rate is that your fixed at, if that rate to the public has now increased you will not to pay a penaly, I hope this helps
 
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